The big news is that AT&T will be discontinuing its unlimited use data plans effective next week which happens to coincide with Steve Jobs worst-kept-secret announcement of the next-generation iPhone.  People are up in arms.

Unlimited, all-you-can-eat wireless data was a beautiful thing for Apple devices on AT&T, delivering streams of Pandora, YouTube videos, a million tweets, and hundreds of webpages without worry. And now it’s dead.

AT&T’s new, completely restructured mobile data plans for both iPhones and iPads have officially launched the era of pay-per-byte data, which we’ve known was coming. We just hoped it would take a little longer. It’s the anti-Christmas.

One thing to keep in mind is that unlimited use tariffs are not part of an efficient or profit-maximizing pricing policy whether you consider monopoly or perfect competition.  It is hard to imagine a model under which unlimited use makes sense unless there is zero marginal cost.  (If marginal cost is positive then under unlimited use your usage will typically go beyond the point where your marginal value exceeds marginal cost. Whatever the market structure, this would be replaced by marginal cost pricing possibly with a reduced fixed fee.)

Still the specific form of the tariff– zero per-MB cost up to some limit and then a steep price after that– annoys many people.  In fact, there are theories that show that this kind of pricing is the best way to exploit consumers who don’t accurately forecast their own usage.

But this brings me to the second thing to keep in mind.  Those exploits take advantage of people who underestimate their usage.  But here is the actual pricing menu.

I bet that you actually overestimate your usage.  I use my phone a lot for browsing the web, maps, etc. and I average under 200 MB per month.  Because some months I do go above 200MB, I will buy the 2GB plan for $25 (I don’t need tethering.)  My wife on the other hand never goes above 200MB.  So the new plan is a better deal for us.

Here’s how to check your usage.

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